Emory Bankruptcy Developments Journal

Corporate Group Cross-Border Insolvencies between the United States & European Union: Legal & Economic Developments

Nora Wouters, Alla Raykin | 29 Emory Bankr. Dev. J. 387 (2013)

As corporations become increasingly globalized, cross-border insolvencies are more prevalent. Insolvency raises the problems of any cross-border dispute: reciprocity, venue, choice of law, and cultural differences. However, unlike a typical adversarial dispute, successful insolvency proceedings do not have a single “winner,” and therefore raise unique problems. Insolvency’s goal of maximum private and public economic benefit is best achieved through cooperation, efficiency, and overall asset maximization. Disparate parties each fighting for their best private outcome would contravene a harmonious proceeding to achieve this goal. However, the absence of a universal insolvency law makes achieving harmony through cooperation across borders especially difficult. Each country has its own laws and procedures, and each citizen creditor has expectations based on their respective sovereign's laws. Differences in these laws range from specific (such as priorities and dischargeable claims) to the overarching goals (such as creditor returns or job preservation).